The Law of Comparative Advantage States That

question 17

Multiple Choice

The law of comparative advantage states that:

• A)each country should specialize in producing the good with the lowest opportunity cost.
• B)a country able to produce something using fewer resources than other countries would gain from specialization and trade.
• C)international trade barriers slow the introduction of new goods and better technologies.
• D)countries can gain from trade if production is subject to economies of scale.
• E)countries must agree on how much of one good exchanges for another.

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Definitions:

Normal Profit

The level of profit that is necessary for a company to remain competitive in the market, often considered as the minimum return required to cover opportunity costs.

Mass Customisation

A manufacturing and marketing strategy that combines mass production efficiency with personalized customization to meet individual customer preferences.

Continuous-Process Production

Raw materials are continuously transformed by an automated system.

Lean Production

A manufacturing philosophy that emphasizes the minimization of waste and maximization of efficiency within the production process.